frequently asked questions

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Here are answers to some of the most common questions asked by people in your situation. Don’t see your question listed? Please contact us for advice.

Will a consumer proposal or bankruptcy affect my credit score?

Consumer proposals will assign you what’s called an R7 rating, which will remain on your credit report for three (3) years after you complete your proposal.

A Bankruptcy will assign you an R9 rating, which will be reported for six (6) years after you complete your bankruptcy (fourteen (14) years if you have been bankrupt before).

Creditors use these ratings to determine risk and to set your cost of borrowing. However, even while in a restructuring program, you can start to rebuild your credit right away, and Bromwich+Smith has the tools and resources to help you do so.

How much does a consumer proposal cost?

With a Consumer Proposal, you pay no professional fees. All costs of Bromwich+Smith are paid by the proposal funds, subject to a government mandated tariff. The amount you will offer in a proposal is tailor made and based upon your income, expenses, assets and who your creditors are.

How much does a bankruptcy cost?

A first bankruptcy will cost approximately $1,600. A second will cost approximately $1,900. The portion of what you originally owe (and will pay back) is determined by the value of any non-exempt assets, surplus income remaining after exemptions for maintaining a reasonable standard of living, and other sources of income like tax and GST refunds.

What happens to my vehicle?

Consumer proposals do not affect vehicle ownership. You will keep your vehicles and continue to make payments, if any.

In most provinces, bankruptcies allow you to keep a generous amount of equity in your vehicle. If it is worth more than the exemption amount, however, your vehicle will be sold and you will receive the cash equivalent of the allowed exemption.

Is a consumer proposal the same as a consolidation loan?

Consumer proposals are different from consolidation loans.

A consolidated loan does not have a negative impact on your credit rating, while a consumer proposal will. However, a consolidation loan will result in you paying back significantly more than the amount you are owing today because of the application of interest, whereas a Consumer Proposal typically allows you to pay back only a percentage of what you owe today, with no interest. Further, a consolidation loan will require that you pledge assets and/or obtain co-signers for the loan, while no such requirements are needed for a Consumer Proposal  

Will a consumer proposal or bankruptcy affect my spouse, partner, or family members?

Unless someone else has co-signed, guaranteed, or otherwise jointly holds credit cards on the same account as you, your debts are only yours. You are legally responsible for them. Whether you choose a consumer proposal or bankruptcy, it won’t affect anyone else’s credit rating, nor will anyone else have to pay for the debt or change their creditor relationships.

What happens to co-signers or joint account holders?

When someone co-signs for a debt, they agree to make the payments on the loan or account when you’re unable to. If a friend or loved one co-signs one of your loans, or if you jointly hold credit cards, the creditor will turn to that person and demand they continue making payments as agreed, or that they pay off the entire balance owed.

Will my employer or friends find out that I am insolvent?

The only way your employer will know is if your wages are being garnished and we needed to send them a letter to stop it. As for your friends, they’ll only know if you choose to tell them.

Keep in mind that it is illegal for a creditor to contact your employer, spouse, or friends regarding your debt, and any such instances are a serious breach of consumer protection laws. The only exception to this rule is if the contact is to confirm your mailing address, or if the person in question is a guarantor or co-signer to your debt.

Can I sell or transfer property before filing for bankruptcy or a proposal?

Please don’t do this. One of the most important principles of bankruptcy and insolvency legislation is the control and distribution of your assets for the fair treatment of your creditors.

Doing this adds unnecessary stress and time to the process. If you give away your assets or sell them for less than fair market value, your creditors can reclaim them through a court order. Speak with one of our debt relief specialists today and see how we can help protect your property through the filing of a consumer proposal or bankruptcy.

What happens if my income increases during a consumer proposal or bankruptcy?

Once your consumer proposal is accepted by your creditors, your payments remain the same and your creditors cannot demand more. Your original settlement amount is protected.

As for a bankruptcy, if your income increases beyond the reasonable standard of living threshold set by the Office of the Superintendent of Bankruptcy, you will be required to submit 50% of everything above the threshold for the duration of your bankruptcy.